Going to the Dogs

Spectrum Brands Holdings, Inc. will acquire Procter & Gamble’s European pet food business, including Iams and Eukanuba brands for dogs and cats, for an undisclosed amount. The business has approximately $200 million of annual sales and will provide Spectrum Brands’ United Pet Group division access to the $21 billion European dog and cat food market which is growing at an estimated 3 to 5 percent annually.

 

“This acquisition will expand and further strengthen our United Pet Group’s broad companion animal product portfolio and help to achieve our objective for more balance between our two products segments of aquatics and companion animals,” said Dave Lumley, president and chief executive officer of Spectrum Brands Holdings. “We already have a strong European pet supplies infrastructure in place that will enable us to leverage these well-known pet food brands in the U.K and Europe. We also see important synergies in overhead, SG&A and distribution over the next few years.”

Eukanuba’s patented formula targets consumers who desire the best nutrition for their pets and is positioned as “extraordinary nutrition for extraordinary beings.” IAMS is positioned for consumers who treat their pets as family members and view the food they feed their pets as a way to make them happy.

“We are adding complementary brands in an adjacent category to expand our global pet business,” Mr. Lumley said.

“This is a strong European pet franchise with outstanding product brand equity and room for growth and margin enhancement,” said David Maura, chairman of Spectrum Brands. “As we continue to expand our Pet division organically and by targeted acquisitions, this business will provide more global balance to our Pet footprint by further building out our continental European and U.K. market presence. We look forward to the contributions it will make to growing our adjusted EBITDA and free cash flow.”

The acquisition, which has been approved by Spectrum Brands’ Board of Directors, is expected to close in 2015 and is subject to customary closing conditions. Last month, P&G said it would sell dozens of non-core brands.